Market Awaits ECB Meeting Tonight
AUD
The Aussie dollar was mixed if not relatively subdued throughout the overnight session. Asian Equities were in the green with the Shanghai Comp gained a positive 0.8%, with the strongest performer of the region being the NIKKEI gaining 2.7%. ASX closed the Wednesdays session up +1.7%, reaching a 5-week high. Commodities were done with Gold down -0.5%, followed by Iron ore declining -0.7%. Relatively quiet in the Macroeconomic calendar for today with the NAB Quarterly Business Confidence set for release at 11:30am and the Foreign Direct Investment YoY print out of China tentatively through the day, neither of which are expected to move markets. Looking ahead it will still be quite light on in terms of local news until next Wednesdays highly anticipated CPI prints, which should give us a better indication of Australian Inflation figures and perhaps insight into the next move by the RBA.
USD
AUDUSD lost momentum and trades lower this morning despite reaching 3 weeks highs last night, with a peak of 0.6930, currently trading at 0.6887 at time. Amid market sentiment which once more dwindles on recession fears. US Equities were closed in the green with the Nasdaq up +1.6%, the S&P up +0.6%, while the Dow Jones closed with modest gains of +0.2%. Out of the region we saw June Existing Home Sales declined by 5.4% to 5.12M to fall short of expectations of a 1.1% decline to 5.35M. Also released and EU Consumer Confidence for July fell to -27.0, down from -23.8 and worse than expectations of -24.9. Looking ahead tonight we shall see the release of the Philly Fed Manufacturing Index, followed by Unemployment Claims, expected 4k lower than last month’s 244k. Then later on, on Friday night the release of the Flash Services and Manufacturing PMI will wrap up the week for the region.
EUR
AUDEUR trades with minor gains this morning with the pair trading at a rate of 0.6757 at time of writing. European equities were up with Eurostoxx +0.5%, FTSE100 +0.65% and DAX +0.7%. Out of the Eurozone German June Producer prices rose 0.6% m/m, missing expectations of +1.5%. From the region we heard Putin reiterate that Nord Stream might have reduced flow unless turbine returns to Russia soon. The EU has proposed a 15% cut in gas consumption in response to Russian supply concerns. Later, Russian Foreign Minister Lavrov said that if the West delivered long-range weapons to Ukraine, then Russia’s geographical objectives of its “special operation” in Ukraine would be expanded further, sending the EUR lower against the US but not having a major impact on the AUDEUR pair. Looking ahead Spanish 10-y Bond Auction will be released tentatively through the day, followed the key focus this evening, which will be the ECB meeting. The ECB is in the unusual position of having pre-committed to a 25bp hike at this month’s meeting way back in June. Markets are expected to look for any clues regarding the size of the follow-up hike in September. The ECB Press Conference will wrap up the day, while even further ahead a slew of Eurozone PMI prints will dominate the Friday before the close of the week.
GBP
AUDGBP was relatively flat throughout the overnight session and trades at a rate of 0.5747 at time of writing. Out of the region the June CPI rose to 9.4% YoY above estimates of 9.3% while the core measure rose to 5.8% YoY, in line with expectations yet regardless considered record Inflation highs. PPI Input MoM release demonstrated a rise above expectations printing 1.8% against expected 1.2% and previous of 2.4%, with PPI Output fairing similarly up to 1.4% against predicted 1.0% and a previous of 1.6%. Meanwhile RPI YoY printed flat at 11.8%. PM Johnsons prime-ministerial replacement narrows down to two as markets anticipate the final decision of the Torrie party. Looking ahead no major data out of the UK until Friday nights’ Flash Manufacturing and Services PMIs print respectively, which should wrap up the week for the region.
NZD
AUDNZD trades with minor losses against its little cousin across the ditch, currently at 1.1055 at time of writing. This morning at 8:45am, Trade Balance printed significantly lower at -701M against expectations of 240M and a previous of 195M, while for the rest of the day, only the Credit Card Spending y/y is left for release. Wrapping up the week RBNZ Statement of Intent is the last item on the cards.